20 Minutes With: Aviation Entrepreneur Kenn Ricci

Mr. Ricci and his wife have given a $100 million unrestricted gift to Notre Dame.
Courtesy of Kenn Ricci

By

Lucy Cohen Blatter

Oct. 1, 2018 5:16 p.m. ET

Kenn Ricci is a longtime aviation executive, principal of privately held Directional Aviation Capital, a company with $2.5 billion in annual revenue that operates a family of private jet companies, including Flexjet, Flight Options, Sentient Jet, Sky Jet, Nextant Aerospace, N1 Engines, and Constant Aviation.

A graduate of the Air Force ROTC program at the University of Notre Dame in Indiana, Ricci, 62, made his first solo flight in 1977, and became a private and commercial pilot soon after. During the early 1990s, Ricci flew then-Arkansas Gov. Bill Clinton during his presidential campaign up until his inauguration in 1993.

Late last year, Ricci and his wife, Pamela, donated $100 million to his alma mater, from which he graduated from in 1978. The gift was given unrestricted, meaning the university can spend it however they see fit.

The $100 million commitment was given through a Philanthropic Succession Partnership, a unique giving structure Ricci developed. The donation will begin to be fulfilled through lifetime gifts by the Riccis and, ultimately, completed with proceeds from the sale of business assets held by a Ricci family limited partnership, which owns interests in Directional Aviation Capital.

Upon Ricci’s death, Notre Dame will have beneficial rights to a limited partnership interest. The university will then hold the controlling interest and have responsibility for the valuation, liquidation, and distribution of the partnership’s assets, providing it with an incentive to maximize their value.

We caught up with Mr. Ricci to discuss this unique giving structure, his career in aviation, and more.

Penta: Was flying something you always wanted to do?

Kenn Ricci: Every little boy wants to fly, but that wasn’t it for me. I got into college, and my parents didn’t have a way to afford it. It was right after the Vietnam War. I knew ROTC was a way to pay for college. And I’ve loved flying ever since. My father used to always say, use your time in college to find your passion. I found it in the military.

How did being a private jet pilot inform your ideas for Flexjet?

It helps because you understand it. I didn’t want to be in the business of aviation originally. I flew for 12 years.

In the early 1990s, you navigated through an onboard system. And when it would break, you’d be stranded, and it cost a fortune. As a pilot I wondered why it would cost so much. I knew I wanted to start a business that could do an economical repair of the units. [Editor’s Note: Ricci founded Inertial Airline Services, a maintenance service organization providing service and repair of electronic and avionics systems in 1990.]

You identify the market’s needs when you’re in it. It’s like a chef whose knives are not sharp enough, so they start their own line of knives.

In 1998, I started Flight Options, which was a different spin on fractional ownership. We saw an opportunity to use pre-owned aircraft. It was after the Gulf War and aircraft manufacturers like Cessna and Beechcraft couldn’t sell their planes.

In 2008, the fractional business came down to Flight Options, Flexjet, and NetJet. In 2013, we bought Flexjet…. But it wasn’t all necessarily a direct line or a plan.

How does Flexjet differ from other fractional ownership aviation companies?

There’s culture and there’s product. Let me start with culture. That’s the number one difference. From being a pilot—from being on the road— I’ve learned what it’s like to be away from home six days a week, and how you want to be treated. Our pilots knew that I understand their needs.

Also, our pilots only fly one N-number each [an N-number is a registration number in the U.S.]. So it’s like a car—they know the car, how the A/C works, how the radios work, etcetera. That provides a sense of pride, predictability, and safety, too.

Where do you see the private jet business going internationally?

If you were to look at our average invoice 10 years ago it was $7,000, namely someone going from Cleveland to New York, or Cleveland to Atlanta.

Now, the average is $25,000. The private jet business is more international. It’s safe and it’s more convenient, so we’ve seen increase in demand and length of trip.

In the U.S., people used to fly privately within the country and then go commercial for international flights.

Now, 90% of all private international traffic is between the U.S. and Europe. We talk about opening things up in India, Zambia, and in China, but the reality is that those places only represent about 10% of the market.

North America and Europe will continue to be the bulk of our business, so we need to have a strong presence in those markets.

What did you want to accomplish with your Notre Dame gift?

Number one, we all come to a realization that families get ripped apart by money more than made whole by it. From a young age, we talked to our children about how much they’d get. We got to a point where we were over the amount we thought we needed.

Traditionally, a donation like this is handled through a charitable foundation or family trust. Usually those require people who, long after me, to decide where the money will go. We wanted to do it differently.

Notre Dame speaks to a certain model of ethics, trust, and morality that’s rare. Most philanthropists want to do something significant. They think they know what’s best for the group more than anyone else, but we didn’t want to do that. We wanted to show a unique trust for the university. That’s why we gave it unrestricted. We didn’t want to control from the grave.

Nearly 50% of the students have financial aid. So we know that’s where the money will go largely. But since it’s unrestricted, if they want to do something completely different—say, create a fund to get students out of a genocide—they can make a decision when it’s needed.

You’ve said that your other charitable giving has been more private. Why be more public about this one?

We’ve done a lot privately. Here we wanted to drive home two things: Unrestricted nature of the gift, the idea of putting your ego aside when giving a gift. Plus, the structure of this gift eliminates appointed trustees.

The structure was unique—a great team that took a year and a half to come up with it. We wanted to have a forum to talk about this unique structure.

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